JULY - SEPTEMBER 2014

TRADER MAGAZINE

CURRENCY WARSBIG MOVES AHEADGREATER CHINAUSD/CNY WATCH

FACTA BILLFOREX FACTS

OVERTRADING

VICTIMSTREND TRADINGART OR SCIENCE?

Brazilian economic miracle

still for REAL ?

US DOLLARM I D Y E A RO U T L O O K

FXCONTENTs

THE FOREX FACTS BEHIND THE FACTA BILL

Will the FACTA bill create a domino effect of changes with the US dollar and its currency counterparts? How should FX traders prepare for money-making opportunities?

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How to identify when not to trade, using Bollinger Bands

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06 EDITOR’S NOTE

FUNDAMENTAL ANALYSIS:11 Currency Wars and Big Moves: Fundamental and Technical Roundup

21 Greater China and the USD/CNY: How China’s main economic indicators can help forecast USD/CNY moves in the next few months

MONETARY POLICY:26 Central Banks Are Playing the Stock Market: Central banks are buying the world’s largest companies to compensate for the loss of bond income due to record-low interest rates41 Central Banks Create a Currency War: Analysis of the major central banks’ current monetary policies and their impact on in�ation and interest rates

CURRENCY WATCH:31 US Dollar Mid-Year Update: Critical Junctures in a quite market

MACROECONOMICS:45 Scottish Independence: Answering the Currency Dilemma

FX MANAGERS:48 Interview with Alan Eisenberg, CEO North America, �e Cambridge Strategy

TECHNICAL ANALYSIS:58 Trading Trends: An Art or a Science?

TRADING METHOD:61 Selecting the Right Time Frame to Trade: A look at di�erent options and trading methods

TECHNICAL REPORTS:

65 Majors: EUR/GBP, EUR/USD EUR/JPY, USD/JPY

69 Trends and Targets: Majors, Emerging and Asian Markets

69 Featured pairs: USD/CHF, EUR/JPY, USD/RUB, EUR/NZD

73 CONFERENCES & SEMINARS

INTERNATIONAL DATA:

74 FX Spot Monitor75 Central Bank Rates76 Economic Data - FX Poll77 Markets View

78 ECONOMIC CALENDAR

ARE YOU A VICTIM OF OVERTRADING?

34IS THE BRAZILIAN “ECONOMIC MIRACLE” STILL FOR REAL?

A look at Brazil’s current macroeconomic development and a fundamental analysis of the Real opportunities

FX TRADER MAGAZINE July - September 2014 3

IS THE BRAZIL IAN “ECONOMIC MIRACLE”

ST ILL FOR REAL?

Political concerns in Brazil ironically run in tandem alongside more optimistic or sanguine business outlooks

Projects have gone ahead with scant regard for the welfare of those struggling to remain above the poverty line

Looking ahead, developments in Brazil will almost certainly prove to be guiding forces in the currency markets

by Kevin Sollitt

Whether we are talking football, currency or politics, common topic denominators are uncertainty, coupled with misinterpretation of implied trends, which can lead us to read signals inaccurately

EMERGING MARKETSFX

34 FX TRADER MAGAZINE July - Septenber 2014

FXEMERGING MARKETS

At the time of writing this article, we’re in the midst of quadrennial FIFA World Cup football action, witnessing a combination of surprising , fantastic and unpredictable action on the pitches - or as some might say, not too different from m a n a g i n g B r a z i l i a n Real (BRL) currency risk in volatile FX markets!

Back to football, the c o l l e c t i v e hopes of the world’s fifth largest country - coincidentally both by population of 201 million and area of 8.5 million square km - are riding high on the abilities of its national soccer team to perform and deliver at the highest level.

What would become a record sixth World Cup victory is within Brazil’s grasp - unless the team crumbles under lofty expectations, only to snatch defeat from the jaws of victory. Which, on a topical note, is surely of concern

to the current Government of 36th Brazilian President Dilma Rousseff, given the current election campaigns to prepare for the October polls. Despite anticipated World Cup fervour,

the Government’s approval rating has slumped from around 40% to 31%, according to a recent IBOPE survey and jeopardising the previous notion that re-election would be a done deal.

It seems that whether we’re talking football, currency or politics, common topic denominators are uncertainty coupled with

misinterpretation of implied trends or direction, that can lead us to read signals inaccurately, for likely or expected results.

POLITICAL CONCERNS

P o l i t i c a l concerns in Brazil ironically run in tandem alongside more o p t i m i s t i c or sanguine b u s i n e s s outlooks. While Brazil’s regime continues to seek and promote Foreign Direct I n v e s t m e n t , a m b i t i o u s c o m p a n i e s c o m m i t resources to feasibility studies and capital towards future enterprises. But the ebullient mood becomes s o m e w h a t

offset or even soured when one considers that the passions of many workers often run so highly against what can be viewed subject to circumstances as big business intrusion, mostly on the basis that people are feeling left behind on the prosperity scale.

It has only been a year or so since the riots first rocked Brazil,

Polit ical concerns in Brazil ironically run in tandem alongside more optimistic or

sanguine business outlooks

FX TRADER MAGAZINE July - September 2014 35